Obama, Congress huddle for talks as 'fiscal cliff' looms

US congressional leaders were scheduled to convene on Friday at the White House for last-minute talks on a "fiscal cliff" deal that avoids automatic tax increases and broad spending cuts that threaten the economy's nascent recovery, but there were no signs that a proposal palatable to both sides was taking shape.

The meeting with top members of Congress was planned as US President Barack Obama returned early from a Hawaiian holiday and just four days before the government goes over the so-called fiscal cliff if no deal is reached.

The bitter partisan fight is over reining in deficit spending by raising taxes for some wealthy earners — the Democrats' priority — and cutting some popular benefit programs, as demanded by Republicans.

Senate Majority Leader Harry Reid warned on Thursday that the United States appeared to be headed over the year-end fiscal cliff with no deal in sight. He also slammed House of Representatives Speaker John Boehner for not immediately reconvening the House.

Boehner called the House back into session for a highly unusual Sunday evening session. Majority Leader Eric Cantor said the House could be in session until Wednesday, the day before the new congress is sworn in.

Friday's meeting was the first time Obama had huddled with all the leaders of Congress since Nov 16 and represented the last hope for a deal before the year-end deadline. Obama spoke to each leader individually on Wednesday.

An aide to Senate Republican Leader Mitch McConnell said he was "eager to hear from the president".

A spokesman for Boehner issued a statement that said the speaker would continue to stress that "the House has already passed legislation to avert the entire fiscal cliff and now the Senate must act".

While there was no guarantee of a compromise, Republicans and Democrats said privately that elements of any agreement would likely include an extension of middle-class tax cuts with increased rates at upper incomes as well as cancellation of the scheduled spending cuts.

An extension of expiring unemployment benefits, a reprieve for doctors who face a cut in payments from the federal Medicare program and possibly a short-term measure to prevent dairy prices from soaring could also become part of a year-end bill, they said.

That would postpone politically contentious disputes over spending cuts for 2013.

The issue has been Obama's first test of muscle after his re-election in November. At stake are Bush-era tax cuts that expire on Monday and revert to the higher rates in place during the administration of president Bill Clinton in the 1990s. Nearly all Americans and branches of the federal government, including the military, would be affected.

The parties have also been arguing about cutting entitlement programs like Social Security pensions. The changes are part of a long-delayed need for the government to address its chronic deficit spending.

Obama ran on a theme of having the wealthy pay a greater share toward deficit reduction with a focus on raising upper tax rates for individuals earning $200,000 or more and couples making more than $250,000. In negotiations with Boehner toward a deficit reduction plan, he offered to increase that threshold to $400,000, but those negotiations collapsed.

Boehner countered with his own plan to let taxes rise for anyone earning more than $1 million, but even that was too far for conservative House Republicans, who rebelled and doomed the bill last week.

Top Senate leaders said they remain ready to seek a last-minute agreement. Yet there was no legislation pending and no sign of negotiations in either the House or the Senate on a bill.

Public opinion has sagged under the weight of the negotiations. Consumer confidence fell to its lowest monthly level since August, largely on concerns over the fiscal cliff, the Conference Board reported on Thursday.